Leanne Macardle

Credit card debt can impact all ages, but it's perhaps when approaching retirement that it becomes particularly worrying, as there could come a time when you don't have any more income to pay it off. Which is why it's so concerning that the amount of credit card debt held by over-55s has hit a post crisis high, at an average of £1,052.

This marks an increase of 9% in the last year, and is the highest figure recorded since Aviva started collecting this data in 2011. The findings suggest "that both secured and unsecured debts are weighing down on over-55s," according to the Real Retirement Report, particularly on those who are still working: over-55 workers owe 76% more on credit cards than their retired counterparts, with the figures standing at £1,296 and £737 respectively.

It isn't only credit card debt, either. Overdraft debt is also an increasing concern, as although the average amount owed is relatively small at £91, it still marks an increase of 17% over the last year, up from £78 at this point a year ago. Things like personal loans can also cause issues, again particularly among those who are still working. As a result, over-55s still in work owe almost twice as much in unsecured debt as their retired counterparts, at £2,490 compared with £1,314, which could even be hampering their ability to retire.

Yet to go mortgage-free

Then there's mortgage debt. Many people hope to become mortgage-free by the time they retire, yet for some, this may be a difficult milestone to achieve, with 31% of workers aged 55+ still paying off a mortgage while just 8% of retired homeowners are doing the same. Happily, the amount spent on housing has fallen from £315 per month to £295 per month in the last year, largely thanks to low interest rates, yet mortgage debt has risen.

The average mortgage debt of over-55s now stands at £68,612, an increase of 14% on a year ago, with analysis suggesting that this is due to an increase in interest-only mortgages being brought into retirement. This is where remortgaging to a new deal could come in, one that allows you to repay both the interest and capital, but you'll probably want to consider this before retiring to stand the best chance of being accepted.

Rising cost of living

The rising cost of living is another concern for the over-55s, with 54% of this age group saying that this is one of their most significant concerns that could threaten their standard of living, up from 45% a year ago. This, combined with rising debt, means over-55s really need to start taking action if they're to boost their standard of living, and ultimately enter retirement debt-free.

"A growing number of Britons are prolonging their working lives and our findings suggest that the goal of a debt-free retirement may be one factor behind this," said Lindsey Rix, managing director of Savings and Retirement at Aviva. "The approach to retirement is ideally a time for saving and careful financial planning, but with the rising cost of living, many people are having to resort to borrowing and still have mortgage repayments to factor into their budgets.

"With widespread speculation that interest rates may rise for the first time in over a decade, this record level of debt is worrying. An increase in the cost of borrowing will undoubtedly create challenging conditions for people to navigate on the approach to retirement."

Time to take action!

If base rate does rise in the near future, as is being widely predicted, it could have a knock-on effect on the interest you pay – and the amount of debt you accumulate. If you don't want to face the prospect of paying off a mortgage and related debts in your retirement, now's the time to take action.

Let's start with mortgage debt. Mortgage rates are already starting to edge up even before a base rate rise has happened, so if you're on a fixed rate deal, see if you can overpay to reduce your balance before it's time to remortgage. Alternatively, if you're on a variable rate deal, now's the time to remortgage to a fixed rate – standard variable rates are already higher than low-cost fixed rates and they could ramp up even more if a base rate rise occurs, so by switching now you can secure your repayments for the long term.

If you're struggling with credit card debt, consider switching the balance to a 0% balance transfer credit card, which will allow you to pay off the debt over the term of the deal without needing to worrying about interest adding to your woes. Or, if you're really struggling, read our guide on becoming debt-free, and hopefully you can get back on your way to starting retirement with a clean slate.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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